Lydia and Cashbee Partner to Offer Savings Accounts

Lydia Expands Financial Services with Integrated Savings Accounts

The French startup Lydia, primarily recognized for its leading peer-to-peer payment application, has been steadily broadening its service offerings. These additions include a debit card, account aggregation tools, donation features, and dedicated money pots.

Partnership with Cashbee Enables New Savings Options

This week marks the introduction of savings accounts to Lydia’s platform, facilitated through a collaboration with fellow French fintech company, Cashbee. Cashbee specializes in enabling users to open and manage savings accounts directly through a mobile application.

Users connect their existing bank accounts to the Cashbee app, allowing for seamless transfers between their primary account and a dedicated savings vehicle.

How Cashbee Savings Accounts Function

Currently, Cashbee leverages a partnership with My Money Bank to provide the underlying savings accounts. Cashbee functions as an intermediary, connecting users’ bank accounts with My Money Bank’s services, rather than directly holding funds.

Account holders can anticipate an interest rate of 0.6% following an initial promotional period offering 2% for a limited time.

Lydia’s Savings Account Offering: Key Differences

Lydia’s integration mirrors Cashbee’s terms, though with some distinctions. The introductory higher interest rate for Lydia users is available for the first two months, compared to Cashbee’s three-month period.

A significant difference lies in the minimum deposit requirement. Lydia mandates an initial deposit of at least €1,000 for new savings accounts. Cashbee, conversely, allows users to begin saving with a minimum of just €10.

However, both platforms provide flexibility regarding subsequent deposits and withdrawals from the savings account.

Strategic Integration and User Reach

The seamless integration of Cashbee within Lydia’s existing app is a key advantage. This integration will expose Cashbee’s services to Lydia’s substantial user base, exceeding 5 million individuals.

This feature is also crucial for Lydia’s ambition to evolve into a comprehensive financial super app.

Competition with Livret A

These new savings accounts directly compete with the Livret A, France’s most popular savings account option. The Livret A is accessible to everyone through traditional retail banks and currently offers a 0.5% interest rate, net of taxes.

While 0.6% appears more favorable on the surface, Cashbee’s savings accounts are subject to taxation.

Tax Implications and Net Returns

For students or individuals exempt from taxes, Cashbee’s offering presents a more advantageous return. However, for those subject to a 30% tax on accrued interest, the net return falls to 0.42%, making it less competitive.

Lydia’s Advantages: Simplicity and Higher Limits

Lydia’s solution stands out due to its ease of use. Furthermore, it allows for savings balances up to €1,000,000, significantly exceeding the Livret A’s limit of €22,950.

Therefore, existing Lydia users who regularly utilize the app for transactions should explore these new savings account options.